In an interview on Failed States

So – your fourth book?

My fourth book is Illicit, which talks about the illegal, the criminal and the illicit economies. De Soto’s theories about terrorism and why people might be attracted to terrorist causes have huge implications. They provide useful insights as to how we deal with terrorism and provide disenfranchised sections of the population with legitimate representation. That is one of the key ways that the problem was dealt with in Northern Ireland, and in Peru, and which I think will be one of the key ways the problem in Afghanistan and Pakistan will be addressed. So, enfranchisement and legal status. Illicit is talking about the other side of the coin, and the – in his view – growing illicit economy. The drugs economy, money laundering, smuggling of people and guns and antiquities, globally, and how these flows work and how we read them as a system. There are some very interesting stories and vignettes from all over the world. How customs officers at frontiers are trying to prevent the flow of elicit goods, but how really the value of these elicit goods is so overwhelming that it is just corroding the state. So we have a real problem to confront collectively.

The corrosion of the state, or the corrosion of the…

The corrosion of the legitimate order. The state is the principal means of organising the rules of the game. It is the guardian of the law for each piece of territory, and the globe is made up of these pieces of territory. Over time we have put more and more of our resources and credence into the market and we have forgotten about the state. The state has become smaller and more corroded and less respected. But in order for the legitimate market to operate smoothly we need certain of the state’s functions to be performed.

But there’s one thing I want to clear up. This is not always the state is it? I mean, there are institutions which are not businesses which are larger than the state.

Yes, but these institutions should and usually do defer to the state. The European Union in particular talks about where decisions should be made. The principle of subsidiarity is the principle that decisions should be made as close to the citizen as possible. But if it’s a question of what crops should be planted next year, or whose field should lie fallow, that should be taken at a village level. If it’s a question of at what time buses should run to school given the daylight hours, that should be a district level decision. If it’s a question of where a ring road should be built, that’s a provincial level decision. If it’s a question of what shops should open on a Sunday, that’s a town decision. But how much to post a letter, or what’s the picture on the currency, well, that should be a national level decision. And what shape should the sausages be? Well obviously that’s a decision for the European Union. This is the debate the United States has had over the past centuries. What should be the division between federal rights and state rights – who gets to decide what? I mean, we’re no longer really arguing about whether the state should exist at all. It’s more, given these federal entities – the United States, the European Union, the African Union – at what level decisions should be made. And that’s a question of architecture.

Well it does seem amazing that we have a European Union at all.

It started over coal and steel. Which brings us back to The Mystery of Capital. People will co-operate through trade. When the princes are all feuding, it’s the merchants who co-operate to organise cross-border trade treaties.